Sacramento sits between Bay Area prices and Central Valley rents. Small apartment buildings in Midtown, East Sacramento and Oak Park cost far less per unit than in San Francisco or Oakland, but California's rent cap, a city inspection program and a tight insurance market all affect the numbers.
In short: LendingStreet finances 5-8 unit buildings across Sacramento, West Sacramento and the surrounding suburbs with DSCR loans that qualify on combined rent, with no W-2s or tax returns and LLC borrowers allowed. Loans start at $150,000 with no stated maximum, and leverage on 5-8 units varies by program. Taxes reset to your purchase price under Prop 13, and the insurance quote is often the line that moves the ratio most.
Midtown and the grid neighborhoods near the Capitol have early 1900s houses split into units, brick walk-ups and 1960s courtyard buildings. East Sacramento, Land Park and Curtis Park have fewer but well-kept small buildings, while Oak Park, Tahoe Park and the area near Sacramento State offer lower prices.
Suburbs such as Rancho Cordova, Citrus Heights and Carmichael have 1970s and 1980s small buildings with parking and laundry rooms. West Sacramento across the river is in Yolo County, with its own assessor and rules.
| Area | Building style | Tenant profile |
|---|---|---|
| Midtown and downtown grid | Converted houses, 1960s courtyards | State workers and professionals |
| Oak Park and Tahoe Park | Small older buildings | Working households |
| Near Sacramento State | 1970s walk-ups | Students and staff |
| Rancho Cordova and Citrus Heights | 1970s-80s garden buildings | Commuters and families |
In California, a sale triggers reassessment at the purchase price. The base tax rate is about 1% of assessed value, plus voter-approved bonds and special assessments. Newer suburban areas such as Natomas, Elk Grove and parts of Folsom can also carry Mello-Roos or other special district charges.
Do not use the seller's tax bill if they have owned for years. Budget about 1% of your purchase price plus the special assessments listed on the current bill. Sacramento County charges a documentary transfer tax, and the City of Sacramento adds its own on top.
A building with five to eight units is still residential for our DSCR programs, so it qualifies on the property's rent rather than your personal income. There are no W-2s or tax returns to collect, LLC borrowers are standard and the minimum credit score is 620. Loans start at $150,000 with no stated maximum, and 30-year terms are available.
The ratio is the combined monthly rent of every unit divided by the full monthly payment: principal, interest, taxes and insurance. The standard minimum is 1.0x, and sub-1.0 programs exist for buildings that fall a little short. Maximum LTV on 5-8 unit buildings can be lower than the 80% purchase and 75% cash-out ceilings that apply to smaller rentals; it varies by program.
Expect the appraiser to review the rent roll unit by unit and compare each rent with similar units nearby. Leases well above the local market can be questioned, and vacant units need a supportable rent figure, so a clean rent roll matters as much as the purchase price.
California's statewide rent cap limits annual increases on most buildings more than 15 years old to a set percentage plus inflation, with a ceiling, and adds just-cause rules once tenants have been in place for a time. The City of Sacramento also has its own Tenant Protection Program, which registers covered units.
The city runs a Rental Housing Inspection Program that can require inspections of rental units, with fees and possible repair orders. Check both programs for the building you are buying and include any fees in your budget.
This example is illustrative and not a quote. An investor buys a 1960s six-unit courtyard building in Midtown for $1,650,000. The one-bedroom units rent for $1,700 each, for a combined $10,200 a month. Taxes are budgeted at $1,650 a month and insurance at $750.
At 75% LTV the loan is $1,238,000, estimated principal and interest is about $8,656 and the total payment is about $11,056, for a DSCR of about 0.92x. At 65% LTV the loan drops to $1,072,000, the payment to about $9,896 and the DSCR rises to about 1.03x. Taxes are budgeted at about 1.2% of price to cover special assessments. The building falls below 1.0x at 75% LTV, so the investor either puts more down or looks at a sub-1.0 program.
| Item | 75% LTV | 65% LTV |
|---|---|---|
| Purchase price | $1,650,000 | $1,650,000 |
| Combined monthly rent | $10,200 | $10,200 |
| Loan amount | $1,238,000 | $1,072,000 |
| Estimated principal and interest | $8,656 | $7,496 |
| Taxes and insurance | $2,400 | $2,400 |
| Total monthly payment | $11,056 | $9,896 |
| DSCR | About 0.92x | About 1.03x |
California's property insurance market has tightened, and some carriers have stopped writing new policies in parts of the state. Older wood-frame buildings in Sacramento can be harder to place, so get a full-building quote early.
Sacramento is a river city protected by levees. Natomas and some areas near the American and Sacramento rivers are in or near mapped flood zones. Flood insurance there is usually required and adds to the payment.
State government, hospitals and UC Davis Health provide a stable base of renters. Many buyers are Bay Area investors priced out of buildings closer to home, and Sacramento gives them more units for the money.
Because rent growth is capped and taxes reset, the ratio has to work on current rents. A larger down payment is common here.
Have these on hand when you request a quote.
Our investor loans are business-purpose loans on non-owner-occupied property. To get a quote, use the form below or call (877) 298-1001 with the address, units, current rents and price.
The LendingStreet team will check the ratio against a realistic tax and insurance budget and show what loan amount the rent supports. Investors comparing markets can also read our California 5-8 unit DSCR page.
Yes. Under Prop 13, a sale reassesses the property at the purchase price. Budget about 1% of price plus special assessments.
It covers most buildings more than 15 years old, with some exemptions. Check with a California real estate attorney for your building.
A City of Sacramento program that can require inspections of rental units. Confirm current fees and rules with the city.
Yes. We finance 5-8 unit buildings across Sacramento, Yolo and Placer counties.
Insurance is required for the loan. If standard carriers decline, ask your agent about other options, and use the actual premium in your numbers.
On our DSCR programs, 1 to 8 units is residential. Nine or more units is commercial and is covered on our multifamily pages.
No. A DSCR loan qualifies on the property's rent. We do not collect W-2s or tax returns. The credit score minimum is 620.
You can bring more cash to lower the loan amount, or look at a sub-1.0 DSCR program if the numbers are close.
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